Daily fantasy leagues blur distinction between games and gambling

BY SAM MELLINGER
THE KANSAS CITY STAR / TNS

If you’ll pardon the mangled cliché here, it turns out that a sports revolution is being televised – during commercial breaks.

The NFL has seen annual visits to its online properties quadruple, to 1.2 billion, and the number of fantasy football players triple.(BOB CHAMBERLIN/LOS ANGELES TIMES/MCT)
The NFL has seen annual visits to its online properties quadruple, to 1.2 billion, and the number of fantasy football players triple.
(BOB CHAMBERLIN/LOS ANGELES TIMES/MCT)

The same factors that are shaping change in every other part of our lives – technology, sure, but also money and power – are shifting the ground beneath the metaphorical feet of sports fans and leagues.

This has been obvious in many ways for many years, but so far mostly in the form of how fans can access and analyze their favorite teams and sports.

No long secret
Now, it is taking gambling – or at least what appears to be gambling, and more on the distinction in a minute – into the open. State and federal laws are being rewritten and reexamined. Billions of dollars and the attention of millions of sports fans hang in the balance.

The shift is obvious in the ads for daily fantasy sports leagues promising seven-figure prizes that run on a virtual loop during any commercial break of a game on TV. The ads are on many sports websites, too, including NFL.com – which is particularly telling because that league spent enormous amounts of money lobbying against a bill that would’ve legalized online non-sports gambling.

The NFL hasn’t gone as far as other leagues. Major League Baseball, the NBA and the NHL have reportedly reached official agreements with daily fantasy sports leagues, even as the legality of those operations is being challenged in court and examined by Congress.

Boundaries challenged
A new industry is exploding. Long-held beliefs are changing. This – today, right now – is a major turning point in the complicated history of gambling in our country, and the way the situation shakes out will forever impact the way sports are consumed.

“Yes, absolutely,” says I. Nelson Rose, an expert on gambling law and a professor at Whittier Law School in California. “Even the NFL coming out in favor of something that looks like gambling is astounding.”

We are still in the frontier stages of this, but the rules are clearly changing. League-sanctioned websites – again, NFL.com stands out – are producing content and giving tips for fans playing in daily fantasy leagues, which are being promoted and advertised in ways that sure look like gambling.

Betting ‘mutual fund’
Nevada recently legalized what are essentially mutual funds for sports bets. A man named Matt Stuart started the first one, which he likens to an investment club. Now, he thinks he can get a 7 to 10 percent return on that investment. The investors can come from anywhere in the country, so this is one more small step toward people outside Nevada being able to legally wager money on games.

Daily fantasy leagues are less subtle, even as their legality is in question. The argument depends on a small distinction, and the outcome will decide what could be a billion-dollar industry. Legally, gambling is defined in part as games of chance played for money, like slot machines.

Daily fantasy leagues are defining themselves as games of skill. This is a distinction that reasonable people can disagree on.

For instance, DraftKings is advertising NFL lineups that won $2 million in the first two weeks of the season. The first lineup included Jarvis Landry (who returned a punt for a touchdown) and Tyler Eifert (who doubled his career touchdown total in one day). The second included Danny Woodhead (who went over 100 yards from scrimmage for the first time since 2010) and Travis Benjamin (who scored three touchdowns after scoring just five in his first 39 games).

Is that skill, or luck? And if it’s skill, which isn’t banned by the gambling law, why is that different than picking, say, the Chiefs and the points on Monday night?

“If you’re already telling people they can gamble on the lottery and in other ways, then why not allow this?” says David Schwartz, director of the center for gaming research at UNLV. “It’s something people obviously want to do.”

Momentum building
Rose, Schwartz and other gambling experts see clear momentum toward looser laws. Opposition is either hard to find or disorganized.

Sports gambling is legal and regulated in many other countries, perhaps most notably England. A recent white paper by the research branch of GamblingCompliance.com said a fully legal sports market in America would produce $200 billion in wagers and $12.4 billion in revenue. That’s more money than any professional sports league, including the NFL.

Right now, it’s believed that less than 5 percent of sports bets are made legally.

Along with following what seems like an evolving public opinion toward gambling – it’s a vice, but largely a harmless one – the most compelling reason for the shifting treatment of sports wagering is the money available.

That’s why we’ve come this far, you know. The NFL and other sports leagues have traditionally been vehemently opposed to gambling. They often characterized themselves as protecting the integrity of their games, despite a long history that shows regulated gambling is the strongest deterrent to scandals.

If you enjoy seeing hypocrisy exposed, you are enjoying the way this is playing out.

The NFL once spent considerable money, effort and time lobbying against a bill that would not have affected sports wagering. The league did this because it worried about a slippery slope, that if it didn’t take a stand against all gambling it could not take a stand against any gambling.

Money rules
But money rules the world, particularly the sports world, and extra-particularly the NFL’s world.

The advertising revenue from daily fantasy leagues is nice, but the real attraction is in television ratings.

The NFL has long operated with TV ratings and contracts in mind. That is where the league gets the bulk of its revenue, which means the NFL has been forced to quietly change its stance on gambling with the emergence of daily fantasy leagues.

Even more than season-long leagues, daily games mean a heightened investment in performances, some of which happen in otherwise dull or uneven games. Those fans are more likely to continue watching blowouts, or further plan their weekends around the television.

The NFL, especially, has been predictably brilliant about how it’s embraced this new revenue stream. While other leagues have latched on to a particular brand of daily fantasy games, the NFL has let them fight amongst each other. They are all advertisers, and they all have customer bases which are being programmed to watch games more closely. This way, the NFL also gets to stay out of the legal battle.

This may be a new trend, but it’s following the same thing as most every other trend since the beginning of time – money.

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